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Address in Reply to Her Majesty's Most Gracious Speech

My Lords, let me begin by reminding your Lordships' House that the battle against terrorism was referred to twice in the gracious Speech. In Northern Ireland, we know more about terrorism than does any other part of the United Kingdom. With that in mind, I wish to detail the most serious breach of financial security by terrorists that has ever occurred within the United Kingdom. In 2001, a major UK bank—the Bank of Scotland—bought an Irish government-owned bank called ICC. Despite due diligence, which operates in any normal takeover, the chairman of ICC—Philip Flynn—was for reasons not yet explained allowed to stay by the UK bank as chairman of the Bank of Scotland (Ireland). Flynn had been made chairman of ICC by the Irish Finance Minister Rory Quinn in 1996. Quinn now admits that the "fit and proper" regulatory test for a person to control a bank was not applied. Flynn was prosecuted for IRA membership in 1974. The police understood that he had been its chief finance officer. He became vice-president of Sinn Fein from 1980 to 1985. When in 1997 Bertie Ahern became Irish Prime Minister, Flynn had already been his friend, adviser and main troubleshooter for some years. Mr Ahern appointed Flynn to run a civil service dispersal programme, which made available for sale property in Dublin worth hundreds of millions of pounds, and required the purchase of property in the provinces worth tens of millions of pounds. Flynn became, in the words of the Irish media, a "pillar of society". The Irish police knew differently. In 2002 and 2003, they observed Brian Keenan, currently an active member of the IRA army council, staying for some time at Flynn's home in Dublin. They observed Slab Murphy, the IRA chief of staff, meeting Flynn on a regular basis. They reported that to the government. Nothing happened. Flynn continued as the Prime Minister's friend and head of the local Bank of Scotland. Mr Ahern continued as Tony Blair's indispensable guide, friend and partner in the peace process. I have no doubt that, as usual, the Irish police shared the information with the authorities in the UK, so why did Her Majesty's Government also do nothing? The biggest criminal and terrorist organisation in the United Kingdom had its leading members staying at the home of the local chairman of the Bank of Scotland—the fifth-largest bank in the Irish Republic, with a loan book of more than £8 billion. In 2004, Flynn became a management consultant to Sinn Fein, the IRA's partner in politics and crime. At that stage, he was the senior adviser both to the Irish Prime Minister and to Sinn Fein—and still no one acted. All, according to the UK-regulated Bank of Scotland, was fine; likewise with the Irish Government. It seemed to matter not that a man handling billions of pounds of public money was also reconstructing a criminal organisation dedicated to the destruction of the Irish Republic and its government. In December 2004, the Northern Bank in Belfast was raided by the IRA, netting £26 million. That money was immediately smuggled into the Irish Republic, to be cleaned in a well established laundering operation. The Irish Minister of Justice described those who assisted the IRA and Sinn Fein to set up the "state within a state" and the money-laundering operation as "sleepers" and "pillars of society". The police now believe that the IRA has up to £2 billion in assets in Dublin from pubs, hotels, houses and other legitimate investments. They are based on a cash deposit of stolen money, and between 80 and 90 per cent of lending by a "friendly institution". Following the move of the Northern Bank raid's proceeds to the republic, panic set in. A flood of money, capable of acting as deposits for hundreds of millions of asset purchases, threatened the Irish state with financial destabilisation. The Irish Justice Minister acted. In the week of 18 February, his police launched a series of raids without Mr Ahern's knowledge against the money-laundering "state within a state". A managing director of a company of which Flynn was a director was found with £2 million in plastic bags in a wheelie bin in his garden. Men were found with tens of thousands of pounds in a car in Dublin. In Cork, a man was caught burning tens of thousands of pounds, all believed to be part of the Northern Bank haul. Mr Flynn resigned all his posts. To date, the Irish Government have given no explanation of why Flynn was on the board of the government bodies long after they knew that he was back associating with his old IRA friends. The Irish bank regulator, obliged by law to react to a sudden resignation of a senior bank director, has done nothing. That regulator seems to believe that the public are sufficiently beneath contempt as not to be worthy of an explanation. The chairman of the Bank of Scotland is the noble Lord, Lord Stevenson of Coddenham. I advised him three weeks ago that I would be making these remarks today. He may be in your Lordships' House, in which case I will give way to him at any time. He wrote to me that: "Mr Flynn was well thought of in Irish financial circles". He did not mention that Flynn was a well known former IRA man who was busily reconstructing Sinn Fein and associating with active IRA criminals and terrorists, who were at that stage, according to the Justice Minister, planning the Northern Bank raid. In April, the same Justice Minister—albeit in code—accused his own Prime Minister of associating with criminals and subversives. His covert accusation was factually correct. Mr Ahern was socialising with Flynn. That night, the leader of the Minister's party—the Progressive Democrats—said that she could go into "coalition with any party". To many, it seemed that they had put Mr Ahern on notice to quit. Was there a deal to allow the IRA to buy its way into respectability with stolen money? What is the link between Sinn Fein and Mr Ahern that allows some in the Irish Government to turn a blind eye to the "state within a state"? In 1996 an unarmed policeman, Detective Jerry McCabe, was murdered by the IRA during a bank raid. A man was charged with manslaughter, not murder; he and his associates were given prison sentences. Gerry Adams and Martin McGuinness tried to get the killers released as part of the peace process. Mr Ahern and his coalition partners gave their word to Jerry McCabe's widow, Ann, that the men would serve their full sentences. But last November, Mr Ahern announced that the killers' release was a non-negotiable demand by Sinn Fein and that he had agreed to it. He forced his coalition partners to acquiesce. What was despicable beyond belief was that he also forced Ann McCabe, by blackmailing her with the threat that she was holding up the peace process, to go along with his decision. Who was Bertie Ahern relying on as his close adviser on Sinn Fein? Philip Flynn. At the behest of Adams, McGuinness, Flynn and a Frank Connolly—of whom more later—Mr Ahern broke his word to the widow of the murdered policeman. He humiliated his partners in coalition and blackmailed the widow. Mr Ahern has made no explanation, nor apology, for his appalling conduct. The only explanation possible for Mr Ahern's refusal to act on his police force's advice about Flynn, and the about-face over Jerry McCabe, is that Sinn Fein has undue influence over Fianna Fail through a combination of money and blackmail. What is even worse is that it was all for nothing—all the duplicity and all of Ann McCabe's renewed grief. The murder of Robert McCartney and the theft of the £26 million showed the IRA in their true colours. Sinn Fein wants a peace in which its gunmen rob banks and invest the proceeds with impunity. That would be a criminal peace in which its intelligence gathering operation can continue under the brazen public cover of the Centre for Public Inquiry, run by Frank Connolly, the brother of one of the Columbia three. Based on the conduct of Fianna Fail and its creation of the Provos by gun-running in 1969, and of Mr Ahern over the past 10 months, Sinn Fein will get it. I am pleased that the UK bank regulator has indicated that he shares my concern over activities in Belfast. I ask the Minister to ensure that the Bank of Scotland's Belfast loan book is urgently inspected by the Police Service of Northern Ireland's fraud squad. I think that history will show that Mr Ahern betrayed his own country; he knew what was going on and allowed it to happen. Is it any wonder that the Belfast peace process is dead?